Lou Jiwei pointed directly at the outstanding problems in the capital market, and proposed to appropriately expand the short mechanism
Lou Jiwei, member of the Standing Committee of the CPPCC National Committee, director of the Foreign Affairs Committee and former Minister of the Ministry of finance, said at the meeting that to expand the opening up of the capital market, the main thing is not to guide how much external capital will enter the Chinese market. In fact, many foreign-funded financial institutions will enter the market, but more are ready to do RMB business. The main thing is to introduce the rules of mature market, not only the regulatory rules, but also the mature rules and concepts of behavior, to promote the transformation of the capital market from retail speculation to institutional value investment. From the market full of price fraud to the way of price discovery in fair competition. So as to enhance the ability of capital market to serve the real economy.
However, Lou Jiwei also pointed out that although Chinas capital market has made considerable development and obvious progress, there are also a series of problems to a large extent, such as the Ponzi of the primary market, the retail of the secondary market, and the manipulation of accounting valuation. The specific performance is as follows:
First, there are a lot of Ponzi financing and investment in the primary market. In the mature private equity market, a general partner (GP) only manages one fund by stages in the same industry (information technology, biomedicine, etc.) or at the same stage (angel, venture capital or M & A, etc.) according to its own advantages and specialties. In China, a GP manages multiple private equity funds of the same type, which is likely to reverse projects among funds, manipulate performance, and continue to develop new funds to undertake projects of poor quality among old funds, so as to support Pangs financing with Pangs investment.
At the same time, due to various reasons, the relationship between general partner (GP) and limited partner (LP) is abnormal and lacks trust. For example, LP requires a large proportion of the fund share and the veto power of the investment project, or GP becomes the project source team seeking investment opportunities.
Second, the problem of institutional investors retail distribution in the secondary market. In mature markets, institutional investors are the main investors, most of them entrust institutions, and few of them are retail investors. Institutional investors mainly obtain income through allocation, with attribution accounting for more than 80%. The overall turnover rate of mature market is low, price discovery is better, and speculation is less. Because the market is effective, the level of excess return that fund managers can contribute is also low.
Third, investors make full use of accounting standards to classify and value financial assets in their own way. According to accounting standards, financial assets can be divided into transaction type, available for sale type and held to maturity type, and can be priced according to fair value or amortized cost, and large amount of shares can also be accounted by cost method or equity method. The boundary of the applicability of accounting standards is not clear enough, and the range of discretion is large. All kinds of capital pools are the confusion of underlying assets, nesting layer by layer, increasing leverage, and using unclear applicable boundaries of the standards to conduct accounting in a more favorable way, manipulate earnings and cover up risks. Compared with the international mature market, the mark to market system should be adopted in the investment field to measure at fair value. Only in this way can we reflect the real situation of investment objectively and discipline, effectively monitor investment risks and prevent the occurrence of Ponzi scheme.
The change of accounting method can not be carried out step by step. We must prevent the overall collapse of the bubble and cause systemic risk in the process of deleveraging. Therefore, it is necessary to set up a transitional period for the new regulation of information management. Lou Jiwei said that the transition period has given financial institutions more time for rectification and transformation, breaking the rigid exchange, banning capital pools, curbing channels and strictly controlling risks. At the end of the transition period, all investments should be accounted for in accordance with international standards (i.e. Gips).
Lou Jiwei said that the above phenomena are caused by the combination of various problems such as bad market style, improper rules, inadequate supervision and low risk awareness of the whole society. Due to the short development time of Chinas capital market, the quality of listed companies, the degree of investor specialization need to be improved, and the relevant laws and regulations and system need to be improved. In the process of further promoting the high-level opening up of capital market, how to grasp the pace of opening up and prevent and control financial risks are major issues to be considered.
In view of the above situation, we should strengthen the opening up and attract more mature overseas investors to enter the domestic market. On the one hand, we can attract some funds to enter the domestic market. On the other hand, we can help guide the investment concept and style of the primary and secondary markets to integrate with the international market, improve the risk awareness of domestic investors, and promote the market to gradually mature and healthy long-term development of the industry. Through the combination of supervision, institutions and market opening, we will change the investment culture of capital market, improve the price discovery function of capital market, guide capital to gather to enterprises with higher efficiency and better prospects, improve the proportion of direct financing of enterprises, reduce the debt ratio of enterprises, and realize the optimal allocation of resources.
In addition to opening wider to the outside world, in view of the high-quality development of the capital market, Lou Jiwei also puts forward the following suggestions:
First, regulatory rules should be stable and transparent. It is found that with the improvement of business environment, foreign financial institutions have set up holding subsidiaries in China, and the company registration process has become more simple and efficient. However, the actual business of the company still needs a long filing process. In particular, the filing process is not transparent, and there is still a shadow of administrative approval. Only when the regulatory rules are stable and transparent can the confidence of market participants be enhanced, and they are willing to come to this market and continue to participate in market investment. If we want to introduce mature overseas institutional investors, we need to focus on the construction and upgrading of regulatory methods, rules and processes, which are basic projects, in order to achieve the goal of building a nest to attract Phoenix and ultimately promote the growth and maturity of the entire capital market.
Second, change the regulatory thinking and introduce the short mechanism. Regulators should maintain the fairness of the market mechanism and the full disclosure of information, rather than take the initiative to bear the responsibility of the indexs rise and fall. In the future, we can appropriately expand the short mechanism to form a market-oriented punishment system for financial fraud companies, so that the market can play a more effective price discovery mechanism, so that good stocks can be distinguished, and provide investors with tools to hedge against falling risks. At present, the markets long short strategy is actually a stock long, using short stock index to hedge. It is suggested to launch a real long short investment strategy in time. For individual stocks short, we can use the hedging mechanism tool of industry individual stocks long to improve the market clearing mechanism.
Third, prudent liberalization under capital. In addition to the United States, the cross-border flow of large amounts of short-term funds is of no benefit to the economy, and governments and scholars have reached a consensus. We must prudently and prudently promote the opening of capital account. The opening of capital market is not equal to the opening of capital account. China must be cautious on the issue of capital account opening, cultivate capital market instruments in stages and step by step, expand the participation of foreign financial institutions, and relax the control of capital account transactions. We can start from the Treasury bond market, and then gradually spread to the stock market, but we must form a closed-loop to prevent arbitrage. At the same time, we should strengthen the construction of anti money laundering system and prevent the convenience of cross-border capital flow from becoming a new money laundering tool.
Shang Fulin talks about financial innovation and puts forward four principles and four suggestions
Shang Fulin, member of the CPPCC National Committee and former chairman of CBRC, also delivered a keynote speech of nearly 5000 words on how to develop capital market and financial innovation. He believes that facing the complex and severe international and domestic economic and financial situation, financial innovation needs to adhere to the mission of serving the real economy, which is the only right way out for finance. In China, financial innovation should be based on Chinas national conditions and the law of financial essence, make up the short board of equity financing market, and improve the basic system of capital market.
Shang Fulin said that since the 18th CPC National Congress, in the aspect of supply side reform, finance has vigorously promoted the construction of Inclusive Finance, multi-level capital market and other key areas, effectively prevented and resolved financial risks, and made important progress and achievements. However, with Chinas economic transformation and upgrading, the financial development is not balanced and sufficient, and the financial system is not suitable and mismatched
Second, structural contradictions in the financial service system are still prominent. Although great efforts have been made in the financial sector in recent two years to support private enterprises and small and micro enterprises, there are still not enough ways. In terms of monetary policy, although relevant departments have also tried many ways, the mechanism path of transmission to the private economy is still not smooth. The degree of diversification of the financial product system still needs to be improved, and the homogenization of financial products is still obvious, which is difficult to effectively meet the diversified financing needs of innovation and entrepreneurship enterprises, green economy transformation and development, as well as the multi-level asset allocation needs of residents wealth accumulation, and the channels and mechanisms for the transformation from savings to investment need to be continuously expanded and improved.
In the face of the above problems, we need to strengthen financial innovation to solve them. However, Shang Fulin also reminded that the history of international and domestic financial development has repeatedly proved that financial innovation must attach great importance to risk prevention, especially for those illegal financial activities under the banner of innovation and Ponzi fraud financial fraud. Financial innovation needs to adhere to the mission of serving the real economy, which is the only right way out for finance.
With the rapid development of financial science and technology, some new financial formats have emerged, such as online lending, virtual currency trading, campus lending, etc. now some things have done this, which is also in that direction, but from the basic logic of finance, it is not so at all. If you say something impolite, you are fooling everyone and the public. The result of the deception is the final explosion of thunder and the accident. Shangfulin said.
Shang Fulin said that many so-called innovation activities under the banner of financial innovation and scientific and technological innovation are actually created to avoid regulatory and hidden risks. In essence, they are variations of the past financial chaos, but the structure is more complex, the correlation is higher and the harm is greater than before.
On the one hand, it causes unclear risk base, multiple nesting and superposition of some products, mismatch of term, concealment of underlying basic assets and actual risk-taking, resulting in a significant increase in cross industry, cross market and cross regional contagion of financial risk. On the other hand, it raises the social transaction cost, and the off balance sheet business evades supervision by means of channels. Even though it does invest in the real economy after penetration, it greatly lengthens the financing chain, reduces the efficiency of currency transmission, pushes up the financing leverage of enterprises, and increases the financing cost of enterprises. In addition, with the popularization and application of Internet technology and the online financial behavior, risks may also extend to other fields.
Therefore, to promote financial innovation, the following principles should be followed:
One is to serve the real economy.
Second, based on Chinas national conditions and the law of financial essence. For example, developed countries have commercial credit before capital market. The development of Chinas capital market is to have a market first and then cultivate commercial credit. Because there is commercial credit, an enterprise can only issue bonds and stocks if everyone can trust it. If there is no commercial credit, if you want to issue bonds and stocks, you cant issue them. The reason why some listed companies make false and cheat in our country, and the financial chaos exposed in the market, to a certain extent, is the lack of our commercial credit.
Third, unify market rules. We should continue to improve the financial framework to adapt to the modern financial market system. For cross market innovation business, we should improve the unified regulatory rules, make up for the shortcomings of the system, clearly define the responsibilities of risk prevention and control of all parties, and cut off regulatory arbitrage.
Under the above financial innovation principles, Shang Fulin put forward the following suggestions for promoting innovation in the financial field:
First, we should promote more mature capital markets. First, make up for the short board of equity financing market. Some functions of equity financing market cannot be replaced by credit market.
Second, activate the development momentum of the direct financing market, build a multi-level capital market system and enhance the flexibility of the financial system. We should strictly follow the market attributes of private funds and venture capital funds, promote the development of relevant market norms, especially prevent private placement from becoming public offering, prohibit illegal fund-raising in the name of private placement, and strictly control the quality of listed companies. Scientifically optimize the risk prevention and control and disposal mechanism of the bond market. The bond market itself is also a credit market. If an enterprise defaults on its bonds, the financing cost of the whole market will rise. A risk isolation mechanism should be established to prevent a rat shit spoils a pot of soup.
Third, we need to improve the basic system of the capital market. To strengthen the transparency of capital market and strengthen the commercial credit system, we need to further improve the market-oriented positive incentive mechanism, and increase the degree of punishment for dishonesty, especially the dishonesty of enterprises, especially the false information disclosure of listed enterprises, we need to crack down severely, because it infringes the interests of investors. We will improve product registration, asset circulation and other supporting mechanisms and systems.
Second, further enrich financial market instruments. No matter direct financing or indirect financing, we need to provide more financial product tools for choice.. In view of key areas and key links, we will enrich the types of financial instruments and enhance the support of financial innovation for economic development. We will continue to enrich the modern financial product system with strong value-added, personalized and high value-added functions to meet the growing investment needs of residents.
Third, increase the allocation of inclusive financial resources. There is no doubt that small banks such as rural commercial banks and urban commercial banks must return to the business origin of serving agriculture, rural areas and farmers, serving local economic development and serving small and micro enterprises. But big banks should do great things and promote inclusive finance, which is determined by the allocation of credit resources in our country. Large banks and joint-stock banks have 70% of the credit resources, and they must actively act in the field of Inclusive Finance.
Zhu Guangyao: negative interest rate environment poses a great threat to the stability of global financial market
Zhu Guangyao, counsellor of the State Council and former Vice Minister of the Ministry of finance, said that the global monetary policy of negative interest rates is becoming a trend. Now the worlds bonds denominated in negative interest rates, especially government bonds, have exceeded $17 trillion. This poses a great threat to the stability of global financial markets. The monetary policies of major developed economies such as the United States, Europe and Japan have a great influence on this trend.
Under the background of increasing downward pressure on the global economy, especially the growth rate of Global trade is only 1%, and the negative interest rate policy has a significant impact on the global economy, it is particularly important for China to maintain the general tone of seeking progress in stability and adhere to the six stabilities, so as to ensure the stable and healthy development of Chinas economy. Zhu Guangyao said that he hoped that major global economies would return to the framework of multilateralism, adhere to the principle of free trade, and promote the development of the global economy on the principle of mutual respect, win-win cooperation, fairness and justice.
Wang Jingwu: the banks financial management transformation has achieved preliminary results and improved the new product issuance environment
Wang Jingwu, director of the financial stability bureau of the peoples Bank of China, said that since the implementation of the new regulations on asset management and financial management, banks have actively rectified the scale of financial management business in accordance with the requirements of the new regulations, steadily resolved the stock risks, basically curbed the risks of shadow banks, and achieved initial results in the transformation of bank financial management.
The preliminary results are mainly reflected in, on the one hand, the continuous optimization of the banks financial product structure. At the end of June, the proportion of net worth bank financing reached 35.6%, an increase of about 20 percentage points compared with that before the promulgation of the new regulations. At the same time, the degree of term mismatch of financial products has also been reduced, liquidity risk has been converging, and the average term of closed financial products has increased by more than 30 days compared with that before the promulgation of the new regulations.
On the other hand, regulatory arbitrage has been curbed. The multi-layer nesting and channel business shrank significantly, and the phenomenon of capital idling improved significantly. At the end of June, the scale of interbank financial products was 0.99 trillion, falling to less than 1 trillion for the first time, down more than 50% compared with that before the release of the new regulations.
Wang Jingwu said that for a long time, expected income products have strengthened the illusion of rigid redemption of investors financial management, coupled with the popularity of short-term financial management products, resulting in investors general preference for products with short term and implicit just cash, but it should also be noted that the Chinese people have a traditional culture of thrifty saving, and many investors financial management products are rolling, continuous buying, actually with a long-term Characteristics of savings funds. Investors are actually able and willing to provide long-term funding.
Therefore, we need to further promote reform in policy, improve the financial market system of our country, guide investors policy expectations, gather more living water for the issuance of new products, and expand the supply of long-term funds. At the same time, banks should take the initiative in transformation and innovation, effectively isolate bank financing, self operating business and other businesses in terms of system and operation, and accurately position the relationship between bank financing subsidiaries and other subsidiaries. In the transitional period, we should deal with the relationship between the old products and the new product distribution, and truly achieve the orderly pressure drop of the old products, and significantly reduce the pressure, so as to create a favorable environment for the expansion of the new product distribution.
In addition, Wang said, the financial committee of the State Council announced 11 measures to further expand the opening up of the financial industry, four of which involve the asset management industry. At present, nearly half of the top 20 asset management institutions in the world are banking institutions, most of which have advanced corporate governance concepts, asset management capabilities and risk control level. It is hoped that commercial banks and financial management subsidiaries will seize the opportunity, from learning forms to learning approaches, establish an international vision, improve investment research capabilities, active management capabilities and product innovation capabilities as soon as possible, and sales Ability, strive to be one of the most influential bank asset management institutions in the world.
Source: China responsible editor of securities company: Wang Xiaowu NF